TaxTMI 
TaxTMI 
2017 (3) TMI 1047
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....e additions made on account of treatment of Rs. 23,43,537 of share application money and unsecured loan of Rs. 12,38,000 received from directors as unexplained under section 68 of the Act. 3. The relevant material facts are as follows. During the course of scrutiny assessment proceedings, the Assessing Officer noticed that the paid up share capital of the assessee company has gone up from Rs. 15,00,000 to Rs. 65,00,000 and the assessee company has also accepted unsecured loans to the tune of Rs. 1,05,52,529. It was in this backdrop that he probed the matter further. He found that the assessee company has received share capital application money of Rs. 44,00,000 and unsecured loans aggregating to Rs. 64,85,320 from Shri Nailesh Mashru, a ....
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.... of which source could not explain 14.08.2007 Cash 10000 Cash deposited of which source could not explain 16.08.2007 Cheque 235000 Cheque from Axis bank before issue cheque cash deposited, of which source could not explain 16.08.2007 Cash 85000 Cash deposited of which source could not explain 17.08.2007 Cheque 8000 Cheque from Axis bank before issue cheque cash deposited. 22.08.2007 Cheque 24000 Cheque from Axis bank before issue cheque cash deposited 22.08.2007 Cash 10000 Cash deposited of which source could not explain Total 2205037 In case of Mr. Mehul Kakkad: Date Mode of payment Amount (Rs.) Source 0....
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.... 20.06.2007 Cheque 90000 Not Explained 24.08.2007 Cheque 43000 Not Explained 12.12.2007 Cash 20000 Not Explained 27.12.2007 Cheque 30000 Not Explained Total 12,38,000 From the above table, it can be seen that the assessee company had accepted unsecured loan of Rs. 12,38,000/- from Managing Director Mr. Nailesh H. Mashru for which the assessee company as well as the depositor could not explain any source Therefore, it can be concluded that in respect of the above entries of deposits accepted from the director Shri N.H. Mashru remained unexplained, as the entries where cheques have been issued to the assessee company after depositing cash remained unexplain....
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....m inclined to accept the submission made by the appellant. Both the directors are assessed to tax since long, their Permanent Account No. has also been furnished to the A. O. The scrutiny assessment for the A. Y. under consideration i.e. 08-09 has also been completed in the case of Shri Nilesh Mashru. It is to be noted that no addition on account of the deposits given by Shri Nilesh Mashru has been made in the assessment order. The other director is also assessed to tax and has accepted the fact of giving share application money. Both the depositors have confirmed the fact of giving loan. Regarding the issue that certain amount was given by way of cash, I am of the opinion that once the depositor is assessed to tax and is confirming the fac....
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.... CIT(A) rightly notes, the amounts paid by Shri Nilesh Mashru, Director, are duly accepted in his personal assessment. When the depositors are regular tax payers and the advances made by such depositors as also share application monies paid by such shareholders are duly accepted in their personal assessments, there cannot be any occasion to hold that these amounts are unexplained in the hands of the company. The credit worthiness or identity cannot be an issue in such a situation. The fact that there are doubts about sources of these monies in the hands of the depositor or shareholder cannot be an issue either. In any event, when credit worthiness is accepted for a part of the amount, as the CIT(A) rightly holds, credit worthiness cannot be....